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Oil price ‘upside risks’ remain despite Iran: IEA

Henrik Jonsson | E+ | Getty Images

The cost of oil is being sent higher by "remarkably persistent" factors on both supply and demand, despite concerns that a potential return of Iranian oil to the global market would send prices down, according to the International Energy Agency (IEA).

The influential global energy research body raised its estimates for global oil demand for 2013 by 130 kilobarrels of oil per day, to 91.2 million barrels per day, on Wednesday, citing stronger‐than‐expected demand from the Organization for Economic Co-Operation and Development (OECD) countries in the third quarter, particularly the U.S.

There was also a decline in supply of crude oil from OPEC, the group of oil-exporting nations which includes Saudi Arabia. OPEC supply fell by 160 kilobarrels per day in November to 29.73 million barrels a day, the fourth month in a row supply fell, after political disruptions in Libya and Nigeria.

With signs that Iran is moving towards greater international co-operation under new President Hassan Rouhani, it looked more likely that Iranian oil would come onto the global market again, raising supply and driving prices down. However, a raft of other factors seem to be conspiring to keep the oil price high.

(Read more: Oil market rollercoaster ride not over: IEA)

One of the most important factors is the gradual economic recovery in OECD countries, which has fueled demand for oil. As inventories are relatively low, demand has grown unexpectedly quickly.

"Oil markets participants have been bracing themselves for a soft patch in the first quarter. But

upside risk to oil markets, from both the supply and the demand sides, is proving remarkably persistent," the IEA wrote in a statement.

And the road back from international pariah status for Iran looks like it could be long, with the U.S. renewing its sanction waivers for Iran oil importers at the end of November, a clear sign that it is determined to keep the sanctions for the time being.

(Read more: US to surpass Saudi as top oil producer by 2016)

In the medium term, the production of shale gas in the U.S. and elsewhere has dampened the oil price.

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc.

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